Recent trading sessions have seen the A-share market consolidate on reduced volume, with tightened overseas liquidity expectations dampening risk appetite and prompting a cautious tone among investors. Since September, daily turnover has fallen from the August peak of 2.7 trillion yuan to below the 2 trillion yuan mark, dropping further to 1.64 trillion yuan on September 14, indicating a clear decline in market participation.
Multiple institutional voices surveyed share a common outlook: short-term external disruptions do not alter the medium-term positive trend for the A-share market. The bedrock of market resilience is being built by corporate earnings delivery and the technology-led industrial主线, providing a sturdy foundation for the months ahead.
The Short-Term Disruption Won't Change the Medium-Term Uptrend
"This week's market has been characterized by shrinking volume and price consolidation. Tightening overseas liquidity expectations are pressuring risk appetite, and while high overseas inflation and interest rate levels are a medium-term feature, the recent clarity in U.S. inflation data and the market digesting rate hike expectations help stabilize risk sentiment," notes Chen Guo, Deputy Director of the Research Institute and Chief Strategy Officer at东方财富证券. Chen suggests the market now prices in a likely U.S. rate hike. U.S. long-term bonds face significant pressure from multiple factors, and the Treasury may struggle to unilaterally reverse rising yields. With inflation pressures not yet visibly easing, the probability of a September hike has been revised up, along with expectations for further increases later.
"Once the rate hike 'shoe drops,' it could help consolidate consensus and ignite a new market rally. The A-share market may be approaching a turning point, potentially launching a counter-offensive that could extend until the next Federal Reserve FOMC meeting on October 28, with focus shifting to third-quarter earnings delivery," says Xia Fanjie, Senior Strategy Analyst at中信建投.
"The impact of external disturbances on A-shares remains phased, and there's no need for pessimism about the medium-term trajectory. The market's long-term, steady uptrend is likely to persist," echoes Li Qiusuo, Chief Domestic Strategy Analyst at中金公司 Research. Dong Zhongyun, Chief Economist at中航证券, tells the journalist that a preventive rate hike in September is possible, but subsequent room for increases may be limited. With the market having priced in around two hikes this year, short-term volatility may continue, but he advises accumulating positions on dips and waiting for the uncertainty to clear, which could translate into a "bad news exhausted" scenario. Looking at the medium term, earnings growth for constituent companies of the 科创50 and 沪深300 indices is expected to hit new highs in Q4. Driven by profitability, the market is likely to trend upward with volatility in H2, favoring a tech-growth style.
Earnings Delivery Becomes the Core Driver
"The core driver for the A-share market's upward movement is transitioning from valuation repair to earnings delivery, a trend expected to strengthen further in the second half," states Liu Chenming, Chief Strategy Analyst at广发证券. Mid-year reports show aggregate revenue and profit growth for A-shares remain positive and accelerating, with profits up 15%. The full-year estimate for non-financial A-share companies is to maintain over 15% profit growth. This double-digit performance is largely supported by resource and technology sectors. For example, a sample of over 800 AI-related companies saw revenue grow 30% and profits surge 77% in H1, with ROE reaching 10%, showcasing high prosperity.
"Following two consecutive years of valuation enhancement plans by listed companies in 2024 and 2025, earnings delivery in 2026 is crucial for market performance," Liu adds. While short-term overseas geopolitical disturbances and Fed tightening expectations may pressure valuations, the earnings improvement trend for A-shares in 2026 and 2027 is expected to continue, providing healthy support.
Zhang Qiyao, Chief Strategy Analyst at兴业证券 Economic and Financial Research Institute, believes corporate profitability is a key support for market stabilization. "For this year's market, even if a globally tight liquidity environment pressures valuations, earnings remain an important support for overall market stabilization and for certain sectors to show structural亮点. Looking ahead, high internal profit growth and a broadening recovery scope will continue to support the market and offer more graspable allocation opportunities," Zhang says.
Technology Re-emerges as Market Focus
Significant structural shifts are brewing, with the technology theme again becoming the market's focal point. Zhang explains this is partly due to the market using earnings certainty to counter macro uncertainty after sufficient earlier corrections, and partly because the resolution of various macro disturbances and reduced uncertainty helps bridge market分歧. Previously suppressed global risk assets, especially tech, are signaling a "bad news exhausted" phase.
"Market microstructure stability has recovered in the short term," says Fu Jingtao, Chief Strategy Analyst at申万宏源. He believes the market's medium-term cost-performance is being digested. After the earlier correction, PE valuations, especially for tech companies, have come down from highs. Some manufacturing, cyclical, and consumer sectors have PE valuations back at historical lows, making the market's medium-term valuation attraction less of a concern. Without further adjustments, the communication sector's static valuations would return to historical medians after Q3 2026 reports, and the electronics sector after 2026 annual reports. Q4 2026 could mark the starting point for differentiated rallies in the computing power chain.
In the medium term, the A-share market's major upward cycle remains unchanged. Fu points to clear trends of household assets migrating towards equity markets, leaving ample room for incremental capital. The fundamental cyclical improvements remain on track, with fixed asset formation growth in upstream and midstream manufacturing continuing to decline, increasing the number of sectors with improving supply-demand dynamics over time.
Furthermore, technological progress, especially in the AI industry chain, still has room to grow with strengthening fundamental support. "AI large model iterations continue, application boundaries are expanding, and commercialization is accelerating. With the major cycle extending,景气 tech directions will have a more solid foundation for fundamental diffusion, supporting the market's medium-term upward主线," Fu explains.
Looking ahead, Yan Xiang, Chief Economist at方正证券, tells the journalist: "Multiple positive factors dictate that the long-term positive trend of China's capital markets will not change. First, the domestic economy's medium-to-long-term positive trend is unchanged. Second, A-share valuations remain in a reasonable range. Third, the quality of listed companies is steadily improving, solidifying the micro-foundation. Fourth, increasing dividends and buybacks enhance investor returns. Fifth, patient capital continues flowing in, supporting healthy market development."